Small businesses are a growing target for bank-FinTech collaborations and data integration initiatives as financial service providers explore new use cases for open banking.
For small- to medium-sized businesses (SMBs) in particular, the growing population of back-office enterprise apps, forcing users to toggle between platforms and manually move data from one portal to another, is among the most popular scenarios in which data integrations can support more efficient operations. In this week’s roundup of the latest B2B applications of bank-FinTech collaboration and open banking initiatives, PYMNTS looks at new data integration models.
Xero, for instance, recently struck a FinTech-to-FinTech-to-Bank integration agreement, while Australia’s National Australian Bank demonstrated the opportunities for API connectivity and FinTech partnerships to address banking friction for larger corporates, too.
Plaid’s Global Expansion
Plaid, which provides a unified application program interface (API) to enable bank-FinTech data connectivity, recently announced its plans to expand to three additional markets in the European Union — Ireland, France and Spain.
Based in Silicon Valley, Plaid said it has so far enabled integrations with 15,000 banks across the U.S. and Canada. But in the EU, where the revised Payment Services Directive (PSD2) and open banking regulations have introduced a massive demand for API connectivity in the financial services market, Plaid is working to broaden its European presence. Earlier this year the company launched in the U.K., and its latest expansion comes with integration agreements with a range of financial institutions, including BBVA, Santander, BNP Paribas, Bank of Ireland and others.
In an interview with CNBC last week, Plaid Co-founder and CEO Zach Perret said European regulations have been instrumental in promoting bank-FinTech connectivity, noting that consumers “should be able to own [and] use their financial data to get better financial products.”
Such open banking integrations aren’t only focused on consumers, however, with small business financial services technologies also embracing data integration opportunities.
Xero Embraces FinTech-FinTech Connectivity
As open banking initiatives expand to include small business FinTech, opportunities for data sharing are also exploring new use cases beyond the bank-FinTech connection.
Small business cloud accounting platform Xero is one of them, having recently been the first target for CreDec’s newest service in the U.K. that integrates real-time payments capability directly within the Xero platform. It’s a FinTech-to-FinTech-to-bank connection in which CreDec connects a small business’s bank account to its Virtual Account solution, which is integrated into Xero for imbedded payment initiation capabilities.
In a statement, CreDec CEO Alex Meynell said the connection “effectively turns Xero into a bank front-end.”
“We’ve closed the gap between banking and accounting payments, and starting with Xero, we’re making accounting platforms the principal interface for all payments activity,” he said.
Marco Polo Lands First Australian Bank Partner
Australia’s National Australian Bank (NAB) has announced it will become the first Aussie bank to join the Marco Polo Network, a blockchain trade finance platform.
Targeting trade finance bottlenecks, Marco Polo promotes connectivity between banks, FinTechs, traders and other partners in the supply chain to facilitate smooth funding to the appropriate parties. Using APIs, the network deploys technology from R3’s Corda blockchain tool as well as TradeIX to integrate directly with corporates’ existing enterprise resource planning (ERP) platforms.
The solution not only exemplifies data integration opportunities for the corporate banking sphere, but also reflects the willingness of some of the world’s largest traditional banks to collaborate with FinTechs deploying emerging technologies like blockchain to address major pain points in corporate banking.
Other top financial institutions on the Marco Polo network include BNP Paribas, Commerzbank, Standard Chartered, Bank of America and MUFG, among others.
“Our partnership with Marco Polo Network and R3 is a big step forward in achieving better trade processes for our clients and we are excited about its potential to help our customers grow their businesses,” said NAB Executive General Manager Client Coverage Cathryn Carver in a statement.